Tag Archives: Alberta Climate Change Plan

The Spring session of the Alberta Legislature ended yesterday after forty-days of debate.

The evacuation of more than 88,000 Albertans sparked by the wildfires in Fort McMurray dominated the attention of our political leaders during this session. In response to the wildfire crisis, Premier Rachel Notley and Wildrose leader Brian Jean briefly put aside politics and demonstrated their strengths as political leaders. It was a refreshing break from the negative rhetoric and hyperbole that has come to dominate Alberta politics.

Bill 1: Promoting Job Creation and Diversification Act introduced by Economic Development and Trade Minister Deron Bilous gave the minister new powers to create programs focused on broadening the province’s industries and businesses. “Jobs” and “diversification” were key buzzwords used by NDP cabinet ministers this spring as they face an increase in unemployment and decrease in industry investment caused by the decline of the international price of oil.

The NDP missed an opportunity to improve the composition of the commissions, which will include five appointees (two appointed by the Government Caucus, two by the Official Opposition and one “neutral” chairperson chosen by the government). The NDP should have amended the legislation to create a non-partisan judicial commission similar to the ones appointed to redraw federal electoral boundaries.

Introduced by Finance Minister Joe Ceci,Bill 10: Fiscal Statutes Amendment Act removed the 15 per cent debt-to-nominal-GDP cap implemented by the NDP in the fall session of 2015. This was a classic example of a government walking back on a law which they probably should not have passed in the first place. The Alberta government’s net-debt levels remain low enough that Albertans should not immediately be worried. But as our provincial credit ratings have been downgraded, it will be important for the current and future governments to implement policies that will actually address the government’s significant revenue shortfall and growing budget deficit.

A long-time coming, Bill 21: Modernized Municipal Government Act, was in the works for years, but even so it was surprising that the NDP has been able to introduce it so early in their mandate. Bill 21 overhauls and updates sections of the province’s second largest piece of legislation. Municipal Affairs Minister Danielle Larivee, a rising-star in the NDP, will travel across the province this summer to consult with municipal leaders about the changes proposed in this bill, which only passed first reading during this session.

While there are legitimate criticism of the bill, including whether the carbon levy is actually “revenue neutral,” the Wildrose Opposition failed to offer any alternative plan. The Official Opposition was knee-capped by a serious self-inflicted wound when an article signed by nine Wildrose MLAs compared carbon pricing to Holodomor, the genocide that killed an estimated 2.5–7.5 million Ukrainians in the Soviet Union from 1932 to 1933. Lac La Biche-St. Paul-Two Hills MLA Dave Hansonapologized for the comment but the nine MLAs avoided answering questions about the genocide comparison when asked by the media.

Alberta’s Legislative Assembly is expected to reconvene on October 31, 2016 and sit until December 1, 2016.

The Royalty Review wraps up the second major review panel launched by the NDP after their win in the 2015 provincial election. The report from Alberta’s Climate Change panel represents a more meaningful shift by the government by phasing out dirty coal fired power plants and introducing a carbon tax. As the Climate Change report represents sweeping change, the royalty review panel embraces the status quo.

“It is not the time to reach out and make a big money grab. That just is not going to help Albertans over-all right now, and so I feel quite confident that this is the right direction to take,” Ms. Notley told the news conference in Calgary yesterday.

The decision to keep royalty rates the same is a 180 degree turn from the feisty NDP opposition we knew ten months ago, which claimed Albertans were not getting their fair share from royalties under the old Progressive Conservative regime.

It was also a sharp contrast from the words we heard from the chairman of the province’s previous royalty review. In 2007, Bill Hunter wrote that “Albertans do not receive their fair share from energy development. Albertans own the resource. The onus is on their government to re-balance the royalty and tax system so that a fair share is collected.”

If you were payingattention to the moderate language Ms. Notley and NDP cabinet ministers have used when discussing royalty rates since forming government and launching this review panel in mid-2015, you might be less surprised.

With the government’s messaging in mind, it is not shocking that the NDP did not choose to ignore the panels recommendations and impose sweeping changes that many Albertans, including myself, felt were needed. It is my belief that our resource royalties should have been raised to ensure that Albertans are actually getting their fair share when oil prices are high. This report does not do that.

While the decision to accept the status quo on royalty rates will certainly be a divisive issue within the NDP caucus and party, it demonstrates that Ms. Notley is not a partisan ideologue.

The NDP would have faced a severe political backlash from its right-wing opponents, the energy industry, and thousands of Albertans nervous about the state of the economy if they had jacked up royalty rates yesterday. In the short-term, with the current economic situation in mind, it is a smart political decision to keep royalty rates the same, but in the long-term it represents a missed opportunity for Albertans.

Closing the door to royalty increases will also not help solve the revenue shortfall caused by the drop in the international price of oil. After enjoying decades of high oil and natural gas prices, the old conservative government became over dependent on resource royalties to fund the province’s operations budget. With international oil price dropping, the new government now faces a significant shortfall in revenue.

By accepting current royalty rates, the government has also rebuked months of hyper-partisan rhetoric and nasty attacks from Wildrose leader Brian Jean, who claimed the review was risky, ideological and would “not be independent or fair.” It is troubling that Mr. Jean and his party are opposed to even the concept of reviewing Alberta’s resource royalty rates, something that should be done by the Alberta government on a regular basis to assess whether our rates are competitive.

Creating mechanisms for increased transparency around royalties is one positive outcome of this review. The report recommends the annual publication of a capital cost index for oil and gas wells and the costs and royalties paid for each oil sands project. The Auditor General has reported numerous times that the old Conservative government was not properly tracking whether Albertans were receiving the royalty rates they were owed.

Significant new investment in the Heritage Fund when oil prices do rise again will pay off for Albertans in the long-term. In their 2015 election platform, the NDP campaigned on the promise that “100% of incremental royalty revenue, above the sums earned by Alberta under the current regime, will be invested into Alberta’s Heritage Fund.”

Many Albertans will disagree with the report’s claim that Albertans are currently receiving our fair share from resource royalties. Others will claim it will limit the government’s options for dealing with the revenue shortfall. But, for better or worse, it does show the evolution of Ms. Notley and her party from leftish opposition into a moderate government. For better or worse, yesterday we saw Rachel Notley boost her credentials as a pragmatic Premier of Alberta.

Pigs continued to fly in Alberta politics today as energy industry leaders and environmental groups joined Premier Rachel Notley and Environment and Parks Minister Shannon Phillips at a press conference to release Alberta’s much anticipated plan to take action against Climate Change. The Alberta government received the final report from the independent panel led by University of Alberta economics professor Andrew Leach and announced its plans to phase out coal burning electricity plants, phase in a price on carbon, introduce a limit on overall emissions from the oil sands and introduce an energy efficiency strategy.

Here is what energy industry executives, environmental leaders and opposition politicians had to say about today’s climate change announcement:

“Responding to climate change is about doing what’s right for future generations of Albertans – protecting our jobs, health and the environment. It will help us access new markets for our energy products, and diversify our economy with renewable energy and energy efficiency technology. Alberta is showing leadership on one of the world’s biggest problems, and doing our part.” – Rachel Notley, Premier of Alberta (full release)

“I thank the panel members and the many Albertans, including Indigenous people, industry, environmental groups, municipalities and other partners and stakeholders for their contribution. This is the right plan for our province, and now is the right time to implement it.” – Shannon Phillips, Minister of Environment and Parks (full release)

“The announcement is a significant step forward for Alberta. We appreciate the strong leadership demonstrated by Premier Notley and her government. The framework announced will allow ongoing innovation and technology investment in the oil and natural gas sector. In this way, we will do our part to address climate change while protecting jobs and industry competitiveness in Alberta.” – Murray Edwards, Chair, Canadian Natural Resources Limited (full release)

“Today we are making history, with Alberta taking its rightful place as a leader on the world stage. Premier Notley promised Albertans leadership on the issue of climate change and she and her government have delivered. This is the right thing to do for both for our environment and our economy. The world needs more of this kind of leadership from major energy producing jurisdictions if we are to avoid dangerous climate change.” – Ed Whittingham, Executive Director, Pembina Institute (full release)

“We fully support the Government’s new climate policy direction. It enables Alberta to be a leader, not only in climate policy, but also in technology, innovation, collaborative solutions and energy development. I believe it will lead to Albertans and Canadians receiving full value for their oil and natural gas resources, while addressing climate change.” – Brian Ferguson, President & Chief Executive Officer of Cenovus Energy (full release)

“After a string of pipeline victories and over a decade of campaigning on at least three different continents, the Alberta government has finally put a limit to the tarsands. Today they announced they will cap its expansion and limit the tarsands monster to 100 megatonnes a year.” – Mike Hudema, Greenpeace (full release)

“This new carbon tax will make almost every single Alberta family poorer, while accelerated plans to shut down coal plants will lead to higher power prices and further jobs losses. Wildrose will be looking at every detail of this plan closely, and we will speak out against policies that hurt Albertans and the economy.” – Brian Jean, leader of the Wildrose Party (full release)

“Canadians have high expectations of themselves when it comes to protecting the environment and managing economic growth, and the world expects much of Canada. Alberta’s new climate change policy sends a clear message that Alberta intends to live up to those expectations. Today’s announcement sets Canadian oil on the path to becoming the most environmentally and economically competitive in the world.” – Lorraine Mitchelmore, President and Country Chair Shell Canada and EVP Heavy Oil for Shell (full release)

“Now it’s time for the government to unapologetically promote Alberta’s emissions reduction successes to date and clearly articulate support for the long-term growth of Alberta’s energy industry, including the oil sands, conventional production, natural gas power, cogeneration and renewable energy.” – Greg Clark, leader of the Alberta Party (full release)

“Today we reach a milestone in ensuring Alberta’s valuable resource is accompanied by leading carbon policy. It’s time that Alberta is seen as a climate, energy and innovation leader. This plan will make one of the world’s largest oil-producing regions a leader in addressing the climate change challenge.” – Steve Williams, President and Chief Executive Officer, Suncor (full release)

“On a public policy Richter scale, Alberta’s new Climate Leadership Plan is an 11. It is enormously positive and forward-looking and will yield measurable benefits for the health and quality of life of Albertans. Significantly, the new plan is supported by oil industry leaders, environmental organizations and other important stakeholders.” – Rick Smith, executive director of the Broadbent Institute

“Alberta’s decision to move away from coal-fired electricity generation and dramatically increase its use of renewable energy reflects a trend happening in countries all over the world. More renewable energy in Alberta will reduce greenhouse gas emissions, clean the air, and produce significant new investment and jobs – particularly in rural areas of the province.” – Robert Hornung, President of CanWEA (full release)

“As Premier Notley said today, we expect today’s announcement to further enhance the reputation of our sector and improve our province’s environmental credibility as we seek to expand market access nationally and internationally. As well, the province’s climate strategy may allow our sector to invest more aggressively in technologies to further reduce per barrel emissions in our sector and do our part to tackle climate change. That’s what the public expects, and that’s’ what we expect of ourselves.” – said Tim McMillan, president and chief executive officer of the Canadian Association of Petroleum Producers (full release)

“The Tories have bet $2 billion taxpayer dollars and our oil and gas industry’s sustainability on CCS. There’s no scientific consensus that the technology is safe in the long term. Any report of a failed CCS project should have the Tories thinking twice about their lopsided reliance on CCS.” – Rachel Notley, NDP MLA Edmonton-Strathcona (January 11, 2011)

“Ed Stelmach has no trouble handing out billions of real tax dollars for carbon-capture to his friends in the oil and gas sector. But when it comes to a plan that could create jobs and improve our environment, the money’s just not there.” Brian Mason, NDP MLA Edmonton-Highlands-Norwood (June 22, 2010)

I want to remind the House that this government has chosen to spend $1.3 billion on an unproven, unfounded technology, carbon capture and storage, and on other priorities of theirs. There’s money for them. Yet when it comes to supporting Alberta families and Alberta’s hardest workers, this government couldn’t be bothered to support or to find the money. – Deron Bilous, MLA Edmonton-Beverly-Clareview (December 3, 2013)

This whole idea of investing, giving industry so much money for carbon capture and storage – right? – is an absolute waste of money. We know full well that this is just another way for enhanced oil recovery. It’s another way for large energy corporations to receive public funding, and there’s very little evidence that this very expensive public investment will pay any significant returns either to our environment or to the original plant to which it was intended. – David Eggen, MLA Edmonton-Calder (April 17, 2014).

In opposition, NDP MLAs were harshly critical of the governing Progressive Conservatives investments in the private energy projects (see the quotes listed above).

During the recent election, the NDP platform pledged to end the carbon capture contracts during the recent election campaign, proposing to reinvest hundreds of millions of dollars into public transit programs.

We will end the PCs’ costly and ineffective Carbon Capture and Storage experiment and reinvest the 2015/16 component of this project into construction of public transit, which will help reduce families’ transportation costs and reduce greenhouse gases and other air pollutants. – NDP 2015 election platform, page 18.

Originally marketed as part of the provincial government’s 2008 climate change plan, the Auditor General reported in July 2014 that “the total emissions reductions are expected to be less than 10% of what was originally anticipated.” The technology is unproven and unlikely to actually reduce carbon emissions in Alberta.

Ms. McCuaig-Boyd said in a statement that no further funding for carbon capture and storage is planned beyond the existing projects, but regardless of future plans, the NDP needs to better communicate why it is not fulfilling their promise to cancel the contracts.

If the financial penalties are too steep or investments already made are too large to justify cancelling the contracts, then Ms. McCuaig-Boyd should explain to Albertans how large these penalties would be or what the cost of withdrawing from the projects would be.

If the old Progressive Conservative government negotiated contracts for carbon capture and storage projects that were not in the best interest of Albertans, then the new government should say so.

The opinions expressed on this blog represent my own and not those of my employer or any organization I may be affiliated with.

In addition, my thoughts and opinions change from time to time. I consider this a necessary consequence of having an open mind. This blog is intended to provide a semi-permanent point in time snapshot and manifestation of the various ideas running around my brain, and as such any thoughts and opinions expressed within out-of-date posts may not the same, nor even similar, to those I may hold today.